The Federation of Bangladesh Chambers of Commerce and Industry on Thursday advised the government not to formulate an ambitious budget focusing on general elections for the upcoming financial year 2018-2019 as a big budget would create adverse impact on the economy.
It said that the government should focus on quality and implementation capacity while formulating budget.
At the 39th consultative committee meeting of the FBCCI and the National Board of Revenue, the apex trade body also demanded reduction in corporate income tax, rise in tax-free income limit for individual taxpayers and withdrawal of advance income tax on import of raw materials, multilayer taxation on dividend income and VAT on trade licence and import and export permits.
FBCCI also demanded restoration of untaxed money legalisation provision of the income tax law with indemnity for real estate sector.
In response, finance minister Abul Maal Abdul Muhith said that the government might not take any new initiatives in the budgetary measures for the next fiscal year of 2018-2019 considering the national elections.
Rather, the government is working to give the existing fiscal initiatives a better shape, he said at the meeting held at Hotel Pan Pacific Sonargaon in Dhaka.
FBCCI president Shafiul Islam Mohiuddin said that outlining an ambitious budget keeping in mind the national elections and setting excessive revenue target to implement the budget might put adverse effect on economy.
‘It is necessary to set the size of the budget prioritising quality and implementation capacity and it should be done after discussion with the stakeholders,’ he said.
The government should keep in mind the burden a large budget will have on people, he said, adding that businesses will also be pressurised by the tax authority to meet the large revenue collection target.
Special attention is required in the budget to bring down the cost of doing business and interest rate on bank loans, improve infrastructure facility, including electricity and gas, and increase the capacity of port.
He said that bringing discipline in the banking sector through enhancing control and monitoring by the Bangladesh Bank was required to improve the current situation of the sector.
‘It is imperative that steps will be taken to stop disbursing loans on political consideration and reduce the amount of defaulted loans,’ he said.
Interest rate on bank loans should also be brought down to single digit to make the local industry competitive with the international market, he added.
In its written proposals, FBCCI said that the corporate income tax rate should be reduced by 2.5 percentage points in the budget from the current rate of 25 per cent and 35 per cent respectively for publicly-listed companies and non-listed companies.
Tax-free income limit for individual taxpayers should also be increased to Tk 3.5 lakh from current Tk 2.5 lakh considering the cost of living and inflation, it said.
The provision of undisclosed money legalising facility should be reinstated with indemnity for up to 10 years for real estate sector considering its current situation and to prevent money laundering, it said.
FBCCI also recommended that the NBR should form two joint committees to check misdeclaration, including under-invoicing, and to finalise the proposed VAT rules.
Muhith, while speaking as chief guest, said that they would give the existing fiscal measures a better shape as new initiatives could not be taken in the election year.
He also said that the exporters would directly get cash incentives on export value and e-commerce service would also be included in the IT enabled services category so that entrepreneurs could get tax benefit.
FBCCI’s former president AK Azad sought government’s intervention in containing interest rate on bank loans saying that the banks are demanding additional 4 per cent interest from businesses on loans taken previously.
Another former FBCCI president, Mir Nasir Hossain, said that the government should address the issue of price hike of construction materials as development works had severely been hampered due to price hike of rod, cement and boulders.
Association of Mobile Telecom Operators of Bangladesh secretary general TIM Nurul Kabir demanded removal of ‘discrimination’ in corporate tax rates among the sectors and exemption of VAT on internet services.
NBR chairman Md Mosharraf Hossain Bhuiyan sought help from the FBCCI in finalising the proposed amendment of the VAT rules to introduce VAT online system.
Bangladesh Investment Development Authority executive chairman Kazi M Aminul Islam, former FBCCI president Kazi Akram Uddin Ahmed and FBCCI vice-president M Muntakim Ashraf also spoke, among others.
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